The rapidly expanding data center industry in the Asia Pacific will continue driving growth in demand for diesel generators in the region.

The market for 1-3MW diesel gen-sets will grow from about US$590m in 2012 to about $800m in 2017, according to a recent report by the market research firm Frost and Sullivan.

A lot of this demand will be driven by data center markets in Singapore, Malaysia, Philippines, Thailand and Australia. The developing economies of Indonesia, the Philippines and Vietnam will continue to be key markets for diesel generator sets in the region, the researchers said.

Subha Krishnan, environmental research analyst at Frost and Sullivan, said organizations in the region were using generators for back-up, as power infrastructure had been well-developed in most of the countries and provided access to low-cost utility grid power. “Uptake will remain steady as energy-intensive industries such as oil and gas, electronics, semiconductors, textiles, food processing units, automotive, industrial machinery and petrochemicals, as well as high-rise buildings such as data centers, offices, shopping malls and condominiums turn to diesel generators to deal with unexpected power outages,” Krishnan said.

Although the competitive landscape is unlikely to change significantly during the forecast period, reputed companies might lose their market share to low-cost Chinese brands in the 20-60kW power output capacity segment of the Asia-Pacific market.

Additionally, the preference for gas generator sets over diesel units in prime and peaking applications may eat into the sale volumes of diesel generator vendors. The easy availability of gas, along with the emphasis on emission reduction in Australia will further promote the use of gas generators over diesel, according to Frost and Sullivan.

“Diesel generator suppliers must offer cost-effective, locally-packaged generator sets with well-known, branded engines to reduce prices and boost sales in the Asia-Pacific diesel generator market,” Krishnan said. “As such, diesel generator sets will continue to enjoy steady demand in the market due to their affordability, ease-of-use and maintenance, as well as the lack of import restrictions on engines.”